I question things which people take for granted. I would have been that kid who said the emperor was naked. In real life that kid would probably have been lynched, but I'll take my chances...
I believe truth inherently valuable, no matter how well intentioned the ideology it dispels may be.
I also write about random interesting things from my personal life.

13 June 2012

“A poor person never gave me a job”

The latest meme created by the political Right in order to
attempt to justify massive wealth inequality in America, a talking point for
the middle class to use, but even more so a subtle reminder to them that they
should be grateful towards their social superiors.

It is effective in its simplicity, as good memes and talking points should
be.
It takes so much for granted that it appears to be impossible to counter – it
is in fact an accurate statement – so there is no equally simple one-liner that
can refute it. Each and everyone of the
underlying concepts that it relies on are false, and so to show the irrelevance
of the statement to the issue at hand requires actually delving into and
dissecting the assumptions it makes.
That is generally not practical in casual conversation, nor on a heavily time
restricted televised debate.

But I have as much space as I want here, so, since I have
yet to see a thorough analysis of this –frankly – ridiculous statement, I will
do so myself, right now:

1)Rich
vs. poor is a false dichotomy. “Poor”
means those living near or below the federal poverty level, which is roughly
$10,000 per person in a household. This
is only about the bottom 10-20% of the population.

Above them is the middle class. They
include not only 9-5 workers, but most of the self-employed, and a large
percentage of those who own small businesses.

Above them is the “rich” – the much talked about “1%” – who have 6-digit
incomes, and a couple million in assets.
Some small businesses are also owned by the rich.

Above them is the super rich. They do
not belong in the same category as the merely “rich”. These are the billionaires. They have so much
wealth in existing assets that they could go the rest of their lives without
earning another dollar, live lavishly with limos, butlers, yachts, and private
security, and still leave trust funds large enough that their children never
need to work a day in their lives either.
These people are not the 1%. They
are the 0.01%. There are only a few
hundred of them. As an interesting
side-note, while a fairly large chunk of the rich actually got rich by working
hard, living cheap, saving their excess income and investing it wisely, nearly
half of the super rich got their money by inheriting it.

2)The
person who owns a business does not “create” the positions they hire for. The only way that would be true is if people
who had too much money started hiring people to dig holes in their back yards,
and then hiring others to fill those holes in again. That doesn’t happen. The jobs they hire for are jobs that needed
doing. It is the economy – and
ultimately consumers, who drive demand – that actually create the need for jobs
to be filled. Consumers consist
primarily of the middle class. They are
creating their own jobs.
What form those jobs take can vary. A
century ago the vast majority of those jobs would have been in the form of
individual family businesses, mostly with just one location, which grew bigger
than the family could handle, so they began hiring a workforce. Whether you have a mom & pop corner
store, a family restaurant, and an independent coffee shop, or you have a
WalMart, a McDonald’s, and a Starbucks, either way the exact same jobs
exist. The corporations didn’t “create”
any of those jobs, nor did they “give” them to their employees. They simply took over for the small
businesses that existed before they arrived.
As times has gone on, more and more small businesses have closed as they
have been unable to compete with (or bought out by) larger companies.

3)Even
with the massive growth of nation-wide and international corporations and the
reduction in the small businesses they have displaced, it is still true that 50% of all jobs are
created by small business. As noted
above, small business is owned by either the middle class or the merely “rich”
(as opposed to the super-rich). Small
business, by definition, is not nation-wide, and is not a corporation.
In other words, not only are major corporations not creating new jobs, they
aren’t even hosting ½ the jobs that do exist.

4)In
fact, one of the main reasons large business and corporations have a
competitive advantage over small business is because of the fact that they are so good at eliminating jobs!
There are three main forces that cause the need for American labor to shrink -
and all three have become so common that they rarely get talked about any more,
even though all three were recognized as problems for the American worker while
they first began to develop. They have
become so wide-spread and common that we just take them for granted now, but
they are bigger problems now than they used to be, and they are the root cause
of our current unemployment.

a.Outsourcing
– obviously if a company moves its production to another country (almost always
for cheaper labor) that means there is less need for workers here, and people
get laid off. This used to mean opening
factories in other countries, but it now includes a lot of phone support and
software development as well.

c.Consolidation
– when one corporation buys out another, they frequently have multiple
positions being filled by different people from each of the original
companies. One of them is now redundant,
and so people get laid off.

5)All
three of the previous factors have a couple things in common. One is that it reduces the necessary American
workforce, which causes overall unemployment to rise. Another is that all three benefit the company
or corporation doing it – they have the same (or greater) output, but their
labor costs are reduced, therefore their overall profits increase. Far from assisting the American middle-class
by providing jobs, they literally benefit directly from deliberately
eliminating jobs. As a bonus, as
unemployment rises, competition for jobs increases, which allows employers to
lower wages (or reduces cost-of-living increases, which amounts to the same
thing) which pushes wages down for all jobs.
Again, benefiting the corporation at the expense of the workers.
There is one more important thing they have in common – they all require
significant capital to undertake.
Building a brand new factory overseas is not something a one location
family owned business with a handful of employees has the resources to do. Buying state-of-the-art robots to run a
factory in the US
requires too much spare cash for a small business to make the switch. Buying out all of ones competition, even if
its at a loss, can be a very expensive undertaking. There are obviously going to be individual
exceptions, but in general these are all things which large companies are
likely to do, and which small business is not likely to do.

6)Giant
companies are most likely either owned by the super-rich, or they are
corporations. Corporations are
technically owned by all of their share-holders, which can include anyone with
a stock portfolio (much of the middle class).
However, shareholders get minimal input into the company. All the shareholders are doing is lending the
company their money to use as capital. The decisions of what to do with that money
are made by the “Preferred” Shareholders, the board of directors, and most of
all by the CEO. These are the people
calling the shots, and they are the ones whose job it is to eliminate jobs,
thereby increasing profits.
So while big business is hosting ½ the jobs purely because of their massive
overwhelming size and influence, and having run most of the independents out of
business, they are simultaneously responsible for eliminating all of the
positions which used to exist, and would still if they weren’t around.

7)As
noted above, the thing that allows them to find cheaper ways to replace
American workers is excess capital. Tax
breaks to big business and stock investment increases their excess capital. And so, ironically, as the middle class votes
for policies and politicians that benefit big business with the reasoning that
it will come back to them in the form of employment, they are actually helping
to eliminate their own jobs, while at the same time creating a government
deficit, which ultimately they will pay for, in the form of higher taxes,
reduced services (and “services” doesn’t just mean “welfare”; it means roads,
highways and bridges, communication networks, clean water, police to combat
crime, firefighters to combat fire, elections that aren’t fixed, mosquito
abatement, corruption-free court systems, prisons… all that stuff that makes
modern civilization work) – or both higher taxes AND reduced services.
All to help out the very people in society who need the least help – the
handful of incomprehensibly wealthy people who between them hold enough wealth
to pay down the entire US debt – not just the deficit, the entire debt – while
still leaving all of them millionaires.

Unfortunately, there is no easy way to condense all of that
into a snappy one-liner come-back, and since American’s as a whole have shunned
intellectuallyness and edumacation, one-liners is what sticks – “a poor person
never gave me a job” will stick. And we
as a people will continue voting for politicians and policies that allow
corporations to do whatever they want, not realizing that what they want is to
give the people the ugly end of the shaft.
I guess maybe as long as we are going to turn to edutainment for news
and talk radio commentators for political and economic analysis, we are just
getting what we deserve.
Hopefully as our economy collapses around us it will shake the middle class to
their senses, and we can start to build a new with a focus on benefiting US
citizens as a people instead of profit for profits’ sake when we finally emerge
from the rubble.

7 comments:

I'd consider myself classically liberal (modern center-right), yet I found this to be a great post. I feel that it's best to always consider what both sides of the classic left/right political spectrum are thinking, and your post informs me well on current liberal points of view. Thanks!

However, none of this is "current liberal points of view." I have never heard anyone say any of this (and I follow a few liberal news feeds, commentators, and bloggers). Both sides of the political spectrum have bought into the same mythology, which is why thees trends have continued just as fast under Clinton and Obama as they did under Regan, the Real George Bush, and Jr.

Loved your article you are dead on. Who cares what tax breaks the rich get they deserve it they worked hard for their money at some point whether born into or self made. Rich people give us jobs and employe the Miiddle class. Rich people due support the poor with all their charitable donations they give. Let's take the rich people out of the economy and see wear we all would be. The middle class need to use their brains and wake up!!

How about this retort: "A poor person never took away the job I had and sent it overseas!" ? (Great article Bakari; I wish you had your own column in a well-read periodical. Perhaps you could try to get some articles published in some well-chosen venues?) --mom